Fed shakeup is mostly neutral for markets: one rate-cut supporter is being swapped for another, and rate hikes look unlikely despite rising bets.

• Steve Miran is leaving the Fed to make room for Kevin Warsh, who gets sworn in Friday as Jerome Powell steps down as chair but stays on the board.
• Miran wanted cuts because he expected the job market to weaken, but jobs and retail sales are actually strong, so that argument fell apart.
• Warsh also wants cuts, but for a different reason: he thinks AI will push prices down over time.
• Warsh has a bad track record of calling for rate hikes during the 2008 crisis when the economy needed the opposite, so a recession under him could get ugly.
• Markets are now pricing a 38% chance of rate hikes by December and a 64% chance by end of 2027, but Warsh will likely push for a hold instead, which would be good for stocks.

Outlook: Expect the Fed to hold rates rather than hike, with cuts pushed further out as inflation expectations creep up.